STATE OF UTTAR PRADESH AND ORS. versus SHEOPAT RAI AND ORS.

Citation: [1993] SUPP. 2 S.C.R. 136 · Decided: 07-09-1993 · Supreme Court of India · Bench: B.P. JEEVAN REDDY, N. VENKATACHALA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
STATE OF UTTAR PRADESH AND ORS. 
v. 
SHEOPAT RAI AND ORS. 
SEPTEMBER 7, 1993 
B 
[B.P. JEEVAN REDDY AND N. VENKATACHALA, JJ.] 
Constitution of India, 1950 : Article 246, Second Schedule, List II, 
Entries 8, 51, 62, 66--Foreign Liquor-Sale of-State Government's exclusive 
privilege-Sold to private person under a licence for consideration tenned as 
C 
'Licence fee' or on a graduated or unifonn scale in lieu of 'licence fee' and 
tenned as 'fixed fee', by virtue of U.P. Excise (Amendment) Ordinance, 
1972-Held, the Ordinance was promulgated with regard to a subject on which 
State Legislature had competence to legislate under Entry 8, List [[-'Licence 
fee' and 'fixed fee' are not 'fee', 'tax', 'duty' or 'cess' as envisaged by Entries 
D 51, 62 and 66 of List II. 
The U.P. Excise Act, 1910/The Uttar Pradesh Excise (Amendment) 
Ordinance, 1972/Rules framed under U.P. Excise Act as amended by U.P. 
Excise (Amendment) Rule, 1972-Sections 21, 24-A, 31, 40, 41(c),/s.3/rule 
2(1), Fonns 'F.L.4' & 'F.L. 5'-Sale of foreign liquo!'--(Jrant of exclusive 
E privilege-Held, s.24-A and U.P. Excise (Amendment) Rule 1972, enabling 
State Government to give or sell its exclusive privilege or right to carry on 
certain activities in foreign liquor for consideration tenned as 'licence fee' or 
'fixed fee' in lieu thereof, are not ultra vires the Constitution. 
F 
Words and Phrases : 'Licence fee', 'fixed fee' occurring in .s. 24-A of 
U.P. Excise Act, 191()-Meaning of 
The Uttar Pradesh Excise (Amendment) Ordinance 1972 sought to · 
amend the U.P. Excise Act 1910 by omitting clause (3) of the proviso to s.2 
and sub-section (3) of s.40 of the Act and inserting s.24-A therein. For 
G giving due effect to the Ordinance, the Rules framed under the U.P. Excise 
Act were also amended by the U.P. Excise (Amendment) Rules, 1972. The 
Ordinance and the Excise (Amendment). Rules enabled the Excise Com· 
missioner to grant on behalf of the State Government periodical licences 
·ror retail vend of foreign liquor either on the basis of 'fixed fee system', 
H i.e., granting periodic shop licences on 'fixed fee' determined in accordance 
136 
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.I 
STATE v. SHEOPATRAI 
137 
with graduated or uniform scale, or on the basis of "auction system' i.e. A 
granting periodic shop licences or 'licence fee' which was the highest 
amount of bid in a public auction. Consequently, the State Government, 
by Notification dated 5.7.1972, announced dates of public auction for grant 
of periodic shop licences for retail vend of foreign liquor in various 
districts of the State. 
The Respondents, who were carrying on retail v·end of foreign liquor 
in shops in the State on the basis of licence form "F.L.ff' obtained according 
to 'surcharge system' prevailing under the U.P. Excise Act and the U.P. 
Excise Rules, i.e. system of payment of 'licence fee' for the total quantity 
B 
of foreign liquor to be sold in a year worked out at a fixed unit rate, C 
challenged the constitutional validity of the U.P. Excise (Amendment) 
Ordinance 1972 and the Excise (Amendment) Rule:s 1972 by filing a writ 
petition in the High Court. 
The High Court held that the Ordinance provliding for imposition of D 
the levy was ultra vires the Constitution, as the sa1me was not justifiable 
with reference to entries 8, 51, 62 and 66 in List II of Seventh Schedule to 
the Constitution; and therefore the Excise (Amendment) Rules authorising 
the Excise Commissioner to provide for the mode of levying and collecting 
'licence fee' or 'fixed fee' in accordance with the Ordinance were ultra vires E 
s. 41(c) of the Act. It allowed the writ petition ancl directed the State not 
to give effect to the Ordinance, not to grant shOJJ> licence to any person 
under the Ordinance and the Excise (Amendment) Rules, and to renew the 
licences of the respondents for the remaining JJ>art of the Excise year 
1972-73 under the old 'surcharge system'. The Sftate and others filed the 
appeal on certificate. 
Allowing the appeal, this Court 
F 
HELD : 1. The Uttar Pradesh Excise (Arnf!ndment) Ordinance 1972 
enabling the State to grant shop licences for Bale of foreign liquors to, G 
private parties on 'licence fee' or 'fixed fee' was promulgated with regard 
to a subject on which the State Legislature ha~d competence to legislate 
under entry 8 of list II of the Seventh Schedule 1to the Constitution. 
[pp. 156-D-E] 
Synthetics and Chemicals Ltd. and Others v. State of U.P. and Others, H 
138 
SUPREME COURT REPORT

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